Family Decision Making

Abstract

The classic unitary model assumes that households maximize a household utility function and implies resource ‘pooling’ – household behaviour does not depend on individuals’ control over resources within the household. Since the 1980s, economists have modified the unitary model in ways that have theoretical, empirical and practical implications. Non-unitary alternatives based on joint decision-making by individual family members with distinct preferences broaden the range of observable behaviour consistent with economic rationality. Many non-unitary models imply that both individuals’ control over resources and ‘environmental factors’ can affect intra-household allocation. Empirical evidence has consistently rejected income pooling and, hence, the unitary model.

Keywords

Altruist model of the family Bargaining Collective model of the household Consensus model of the family Cooperative bargaining model of marriage Cooperative games Cournot–Nash equilibrium Family decision-making Gender specialization Household production and public goods Marriage and divorce Non-cooperative bargaining model of marriage Rotten kid theorem Self-enforcing agreements Separate spheres bargaining model Slutsky symmetry Two-stage games Unitary and non-unitary models of the household